The 2020–2021 Thoma Bravo take-private

analysisAccording to the merger proxy, Scott Crabill, a managing partner of Thoma Bravo, emailed Stephen T. Winn on November 3, 2020; on November 12 Crabill and Orlando Bravo told Winn by videoconference that Thoma Bravo was interested in acquiring RealPage, could be aggressive on price and timing and could act without another equity participant. Winn said a written proposal was needed for the board and informed lead independent director Jason Wright and outside counsel Wachtell, Lipton, Rosen & Katz the same day. On November 18 Bravo and Crabill proposed $80 a share in cash, financed with about $3 billion of debt and $7 billion of equity, and on December 4 Crabill sent a revised non-binding letter of intent at $87 a share. ¹

analysisRealPage signed the merger agreement on December 20, 2020 and announced the next day that Thoma Bravo would acquire it for $88.75 a share in cash, valuing it at about $10.2 billion including net debt, a premium of 30.8% over the closing price of December 18, 2020 and 27.8% over its all-time closing high; the board approved the agreement unanimously, and RealPage expected Winn and the existing team to continue to lead the company. BofA Securities and Wachtell advised RealPage, and Goldman Sachs & Co. LLC advised Thoma Bravo and provided financing, with Kirkland & Ellis LLP as its counsel. During a 45-day go-shop period ending February 3, 2021 BofA Securities contacted additional parties, and no alternative acquisition proposal was made. ^{2 3 4}

analysisThe buyer, Mirasol Parent, LLC, and its subsidiary Mirasol Merger Sub, Inc. were formed on December 9, 2020 solely for the transaction and were affiliated with Thoma Bravo Fund XIII, L.P. and Thoma Bravo Fund XIV, L.P. Under an equity commitment letter the funds committed $7.36 billion in cash, and Parent obtained $4 billion of debt commitments from a syndicate including Goldman Sachs Bank USA, Credit Suisse, UBS, Apollo, Wells Fargo, Thoma Bravo's own credit funds and others; the two funds guaranteed certain obligations of the buyer to RealPage up to $533 million, and the proxy estimated the total funds needed at about $11.3 billion. RealPage would have owed a termination fee of $288 million (or $91 million in some cases), and Parent a reverse termination fee of $528 million; the Hart-Scott-Rodino waiting period expired on February 4, 2021, and governmental consents were needed for the change of control of a subsidiary's money transmitter licences. ^{1 2}

analysisWinn is the founder and chief executive of Mirasol Capital, a Dallas investment firm that founded the immersive-entertainment company Cosm in 2020, and the buyer vehicles carried the same name. The merger proxy describes them as formed by affiliates of the Thoma Bravo funds, and the voting agreement was signed for Mirasol Parent by Crabill with notices addressed to Thoma Bravo; none of the retained records explains the shared name or shows any ownership or management link between Mirasol Capital and the buyer entities. ^{3 4 1 5}

analysisUnder a voting agreement of December 20, 2020 Winn and Winn's entities, holding about 10.09% of the shares at February 1, 2021, agreed to vote for the merger and against any competing transaction: 1,419,700 shares held by Winn, 3,000,000 by Seren Capital II, Ltd. and 5,804,587 by Seren Capital, Ltd. Winn's Form 4 for the closing reports that these shares were converted into the right to receive $88.75 in cash, and that immediately before closing a portion of Seren Capital II's shares was contributed to the parent company of RealPage, Inc. in exchange for equity interests in that parent and then cancelled. The filing does not name the parent or the size of the interest; the merger proxy had said directors' and officers' shares would be treated like other shares, and the voting agreement contains no contribution term. ^{1 2 3}

analysisThe merger proxy estimated merger-related "golden parachute" amounts of about $29.3 million for Winn (mostly equity), $5.2 million for Ashley C. Glover, $4.9 million for David G. Monk and $2.2 million for Brian Shelton. On December 29, 2020 RealPage accelerated the vesting of restricted stock for Winn, Glover, Shelton and Barry Carter to mitigate excise taxes under Sections 280G and 4999 of the Internal Revenue Code; the executives' employment agreements bar competition and solicitation for two years after termination. ¹

analysisStockholders of record on February 1, 2021 could vote at the special meeting, where 51,030,050 votes were a majority and directors and executive officers held about 11.00% of the shares; the stockholders approved the transaction on March 8, 2021. After the merger proxy was filed on February 5, 2021, individual stockholders filed four suits in the U.S. District Court for the District of Delaware and another sent a demand letter, alleging that the proxy omitted or misstated material information in violation of Sections 14(a) and 20(a) of the Securities Exchange Act and seeking to enjoin or rescind the merger, and damages. These are the stockholders' allegations as summarised by RealPage, which said it believed the claims were without merit; the retained records show no ruling on them. ^{1 2 3}

analysisOn April 22, 2021 Mirasol Merger Sub merged into RealPage, which became a wholly owned subsidiary of RealPage Holdings, LLC (formerly Mirasol Parent, LLC), an affiliate of funds advised by Thoma Bravo, L.P.; each share became the right to $88.75 in cash. RealPage reported a change in control and described an aggregate consideration of about $11.8 billion funded by $6.88 billion of equity, a $2.75 billion first-lien term loan, part of a $250 million first-lien revolving facility if needed, a $1 billion second-lien term loan, deferred shareholder proceeds, cash and convertible hedge proceeds; Thoma Bravo's own announcement put the transaction value at about $10.2 billion including net debt. RealPage became the borrower under the new first- and second-lien credit agreements, with Goldman Sachs Bank USA as administrative and collateral agent, guaranteed by material domestic restricted subsidiaries and secured by substantially all assets. ^{1 2}

analysisAt closing Orlando Bravo and Scott Crabill, the directors of Merger Sub, became directors of RealPage, Winn was appointed a director and the officers continued in office. RealPage asked NASDAQ the same day to suspend trading in its shares, which had traded under the symbol RP, and to file a Form 25 to delist and deregister them, and said it intended to file a Form 15 to terminate the registration and suspend its SEC reporting obligations. ¹